- Subprime Problems Continue

Market Summary
In our last report, we mentioned that the spreading credit problem in the mortgage and corporate lending markets contributed to very sharp declines across all major indexes. As you can see from the charts below, this continued to be a primary concern as traders watched American Home and Mortgage Investment Corp. (NYSE:AHM) drop 90% because of its inability to payoff debts. The chart of the Russell is still of specific interest because it is nearing the support of its long-term trendline.

As we noted last week, the upward diverging moving averages are still suggesting that the longer-term momentum may still be on the side of the bulls. The Rusell's relatively low RSI value is currently suggesting that the index may start to experience some buying pressure as the bulls look to enter at a spot that gives them a favorable risk/reward ratio.